Checking up on the retail sector

Checking up on the retail sector

Retail – Workplace July 2018

Smarter solutions

The retail sector is not for the faint-hearted – but in a world of fast-evolving spending patterns, resilience, being open to change and employing a flexible/adaptable mindset will see the survival of the fittest.

Statistics NZ’s Retail Trade Survey for the March 2018 quarter, showed the total volume of retail sales rose 0.1 percent compared with the December 2017 quarter, having been seasonally adjusted.

Seven industry categories showed higher sales volumes and eight showed lower sales volumes.

Electrical and electronic goods had the largest dollar volume increase, up 5.4 percent. Sales volumes in this sector have been rising over the past 10 years while the price of these goods have generally fallen over the same period.

Supermarket and grocery stores, plus pharmaceutical and other store-based industries, both recorded notable increases for the March 2018 quarter, up 1.0 percent and 2.7 percent, respectively.

Clothing, footwear, and accessories had the largest fall in the March 2018 quarter, down 5.0 percent, after a year of increased sales growth, and fuel showed a 2.1 percent fall in sales volume when the effects of price changes are removed.

Meanwhile, the latest BNZ and Marketview monthly report on New Zealand’s Online Retail Sales conveyed that growth in online retail sales bounced back in April 2018 , with total online spending 14% higher than in April last year.

This report says spending at domestic online sites was up 16% compared to the prior year, and well ahead of the growth in spending at local bricks-and-mortar stores, which it says were only up 0.4% on last April. Online, the food, clothing and electrical categories experienced particularly strong results.

Online spending at international merchants was up 12% compared to April last year, with computer, clothing and entertainment media categories contributing to over 60% of this growth in spending.

The BNZ and Marketview report says annual online spending across the retail categories it tracks is now approximately $4.3 billion (excluding GST), and once food and liquor categories have been removed from the data, online spending is equivalent to 11.1% of New Zealand’s retail sales.

Retail NZ, the country’s leading retail trade association representing more than 65% of retail industry turnover across the country from small independent operators to large national and international chain stores, has just released its half-yearly report card on the retail sector.

It identifies some problem areas – largely around industrial relations, consumer spending levels, regulation and crime – and claims the sector is under substantial and sustained pressure.

Retail NZ says the environment for retail businesses is challenging given (among other things) that household incomes are increasingly constrained, there’s a lack of consistency around the regulation of shop trading hours on religious holidays, and new legislation on pay rates could see much higher costs for small businesses.

On the positive side of the report card, Retail NZ is pleased to see that the Government is moving to level the playing field by making foreign websites register for GST when selling to New Zealanders, and improved transparency around fees paid for credit and contactless debit transactions and in some cases, a reduction of interchange bank rates for merchants.

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